The country's companies, which make up Asia's No. 4 stock market by value, have 75 percent of their market value represented in the MSCI indexes. MSCI will complete the two-phase process at the end of trading on May 31.
With full inclusion, Taiwan would account for 16.9 percent of MSCI Emerging Markets Index, a 3.8 percent increase.
That may prompt as much as US$1.2 billion in index-tracking funds to flow into the nation's equities, Mowat said.
Fund managers who try to beat benchmarks may take the opportunity to pile more money into the country's stocks because they are on average "underweight" Taiwan stocks by five percentage points, according to Mowat.
He is advising that investors keep six percent more of their assets in Taiwan stocks than represented by their benchmarks after full MSCI inclusion.
Investors "should own equities and lazy, idle cash will get drawn into the market," Mowat said. That's why Taiwan is "going to be the best-performing market this year" in both Asia and emerging markets.
RSS